2015-12-07

Russia One Step Closer to Crisis

Russia has learned to live with oil near $40 and only a decline to $30 a barrel can provoke another deterioration, which isn’t the most likely scenario, the Finance Ministry’s Oreshkin said Nov. 25. The central bank estimates that in a stress-case scenario, with crude below $40 in 2016-2018, the economy will contract 5 percent or more next year and price growth may be at 7 percent to 9 percent. That would also raise risks to inflation and financial stability, according to the Bank of Russia.

GDP will contract 3.9 percent to 4.4 percent this year and may shrink as much as 1 percent next year if oil stays at $50 a barrel, the central bank forecasts.

Some say there won't be a repeat of 1997/1998, but there's a lot of rhyming going on.